A Study of Success and Failure in Product Innovation: The Case of the U.S. Electronics Industry
Posted: 17 Nov 2009
Date Written: 1984
Abstract
Success in high-technology industries such as electronics, computers, aerospace, biotechnology, chemicals, and pharmaceuticals is contingent on effective new product development. The analysis describes the first phase of the Stanford Innovation Project, a long-term study of U.S. industrial innovation, which was organized in 1982 in order to address gaps in the field and to test the impact of differences in research design on pairwise studies of innovation. The research consists of three parts: (1) an open-ended survey administered to 120 participants of the Stanford-AEA Executive Institute, most of whom preside over U.S. electronics firms, in order to identify possible success factors; (2) a detailed questionnaire to rate factors related to product failure or success; and (3) in-depth case studies of 20 of the companies that collaborated in parts one and two of the project. The findings help to define eight general categories of circumstances under which new product success is likely to be greater: (1) great understanding of the customers and the marketplace leading to an introduction of a product with a high performance-to-cost ratio; (2) proficiency in marketing and commitment of resources to selling and promoting the product; (3) a high contribution margin provided by the product to the firm; (4) good planning and execution of the R&D process; (5) good coordination of the create, make, and market functions; (6) early introduction of the product into the market; (7) significant benefits to the markets and technologies of the new product from the existing strengths of the developing business unit; and (8) a high level of management support for the product from the development stage through its launch to the market place. (AT)
Keywords: Champions, Management decisions, Marketing, R&D, Industrial research, Market strategies, Electronics industry, High technology industries, New product failures, Product development, Innovation process, Industrial development, Customer relations, Product performance, Market entry
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